Heather invests 4,900 in an account with a 3.5% interest rate, making no other deposits or withdrawals. What will Heather’s account balance be after 5 years if the interest is compounded 2 times each year?

Solution

He a t h er in v es t s 4, 900 in an a cco u n t w i t h a 3.5% in t eres t r a t e, makin g n o o t h er d e p os i t s or w i t h d r a w a l s . Wha t w i ll He a t h er ’ s a cco u n t ba l an ce b e a f t er 5 ye a rs i f t h e in t eres t i s co m p o u n d e d 2 t im es e a c h ye a r ?

Amount : 5819.66

Solution steps

Translate the problem into an equation:

A = 4900 (1 + \frac{0.035}{1})^{1 \cdot 5}

4900 (1 + \frac{0.035}{1})^{1 \cdot 5} = 5819.66289 \dots

Round to the nearest hundredth:

5819.66

Amount : 5819.66